The subprime mortgage market is “little more than an asterisk in the overall U.S. credit economy,” said Roth Capital Partners economist Donald Straszheim.
The concern that rising defaults among subprime borrowers would spill over to lower consumer spending in the broader economy is unwarranted, said Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.
“It’s the latest episode of housing hysteria,” Snaith said. “It’s a small segment of the overall mortgage market and its problems are not akin to a currency crisis where there is some contagion that just ripples through an economy.”
… just like all that hysteria over some episcopal election back in ’03…
So much for “the experts.”
Actually, the expert might have been right in a very narrow sense. By itself, subprime might have been a minor wobble. But when combined with the larger Option ARM debacle and a housing market that was already overheated, not to mention the Wall Street shell games, the combination proved lethal. That’s the problem with multiple causation; there’s no way to isolate the relative contribution of each of the factors.